Insurance Glossary - Understanding Common Terms

Our glossary is divided alphabetically by
insurance term in a quick reference guide to assist understanding the language commonly used by insurance companies. Policy documents contain a number of these terms because they typically define
the limitations of risk and liability on the insured and any exclusions of coverage.

If you plan to start a new policy or renew your current policy with a different
carrier or agency, it is important to review and understand the policy differences
behind individual quotes from multiple carriers. Lower policy
premiums may be the result of decreased payout benefits, higher deductibles, or maximum
damages allowed. It is important to identify these unique features in any
policy comparison, otherwise a lower price may come at a much higher cost when
you have to file a claim for loss or damages in the future.

Select the first letter of the word or term to locate a definition and brief description.
For example, to get help with the terms "Automobile Liability Insurance" or "Premium", select either the letter A or P from the menu bar below:

Insurance Glossary: Terms that Begin with the Letter 'n'

Named Perils

Coverage in a property policy that provides protection against loss from only the perils specifically listed in the policy (rather than protection from physical loss). Examples of named perils are fire, windstorm, theft, smoke, etc. See also Basic Form, Special Risk Insurance.

National Association of Insurance Commissioners (NAIC)

The association of insurance commissioners of various states formed to promote national uniformity in the regulation of insurance.

Negligence

Failure to use the care that a reasonable and prudent person would have used under the same or similar circumstances.

Net Premium

(1) The portion of the premium rate which is designed to cover benefits of the policy, but not expenses, contingencies, or profit. (2)The portion of the premium remitted to the home office by an agent after deduction of the agent's commission. (3) Net written premium.

Net Present Value

The value today of an asset to be received in the future, either as a single payment or a series of payments (such as an annuity). The value is considered to be different if received at a later date because of the time value of money.

Net Written Premiums

Premium income retained by insurance companies, directly or through reinsurance, after payments made for reinsurance.

No-Fault Automobile Insurance

A form of insurance by which a person's financial losses resulting from an automobile accident are paid by his or her own insurer regardless of who was at fault.

Non-Admitted Insurance Company

An insurance company not licensed to do business in a particular state; such a company may sell excess and surplus insurance in the state if admitted insurers decline to write a risk.

Noncancellable

A clause stating that the insured has the right to continue a policy in force by the timely payments of premiums set forth in the contract for some extended period of time specified, during which period the insurer has no right to make unilaterally any change in any provision of the contract while the contract is in force.

Nonconfining Sickness

A sickness that disables the insured person but does not confine him to his home or a hospital.

Noncontributory

A term applied to employee benefit plans under which the employer bears the full cost of the benefits for the employees. Generally, under noncontributory policies one hundred percent of the eligible employees must be insured.

Nondisabling Injury

An injury which may require medical care, but does not result in loss of working time or income.

Nondisabling Injury Benefit

A benefit in some disability income policies providing payment for medical expense due to injury when medical care is necessary but the insured is not totally disabled.

Nonforfeiture Option

One of the choices available in many life insurance policies if the policyholder discontinues premium payments on a policy with a cash value. This, if any, may be taken in cash, as extended term insurance or as reduced paid-up insurance.

Nonmedical Limit

The maximum face value of a policy that a given company will issue without the applicant taking a medical examination.

Nonoccupational Policy

(1) Contract which insures a person against off-the-job accident or sickness. It does not cover disability resulting from injury or sickness covered by Workers' Compensation. Group accident and sickness policies are frequently non-occupational. (2) One that provides off-the-job coverage only; it does not cover loss resulting from accidents or sickness arising out of or in the course of employment or covered under any workers' compensation law.

Nonparticipating Insurance

Plan of insurance under which the policy-holder is not entitled to share in the dividend distribution of the company.

Nonparticipating Policy

A life insurance policy, generally issued only by mutual insurance companies, in which the company does not distribute to policyholders any part of its surplus. Premiums for nonparticipating polices are usually initially lower than for comparable participating polices, but premiums can be varied. The current premium reflects anticipated experience that is more favorable than the company is willing to guarantee, and it may be changed from time to time. See also Participating Insurance.

Nonprofit Insurers

Persons organized under special state laws to provide hospital, medical, or dental insurance on a nonprofit basis. The laws exempt them from certain types of taxes.

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